Wells Fargo Gets Closer to Customers

Wells Fargo uses its success in online banking to help companies conduct business more efficiently

As a quintessential multinational company, Noble Corp. wrestled with the problem of how to pay its suppliers in the 10 countries where it maintains operations. The $1 billion-a-year gas-drilling company wanted to migrate paper-check payments to electronic payments, but treasurer Mark Mey believed that such a migration would require his staff to spend too much time tying its core SAP financial system to the systems at the five banks that processed Noble's transactions.

If Noble could transmit one payables file from SAP to a single bank, Mey reasoned, much of the scut work could be eliminated. He interviewed a number of banks, but Wells Fargo & Co. was the only one that offered what Noble wanted: an integrated electronic-disbursements system to target high- and low-value payments. Today, Mey says, Noble's "global payments are completed with the press of a few buttons, which takes one person 15 minutes a day."

Known in the 1990s for online consumer banking, Wells Fargo is achieving similar success on the commercial front with three-quarters of its business customers conducting at least some transactions online--most of them via its Commercial Electronic Office portal, known as CEO. The portal serves as a gateway to a host of commercial banking services, including treasury, foreign exchange, brokerage, trust, electronic procurement, and credit and loan services. In four years, CEO has grown to serve 60 percent of its commercial customers. Last year, the portal processed nearly $6 trillion in online payments. "Wells Fargo is about as far out in front in using technology as any financial-services company," says analyst Tim Clark of the FactPoint Group, a research firm.

As the fifth-largest U.S. bank, with assets nearing $387.8 billion, Wells Fargo has harnessed technology to get closer to its customers. Noble didn't need to modify its SAP system; a Wells Fargo team developed custom programming to translate internal payment code into standard formats.

Custom programming translates the customer's preferred format to an internal Payment Manager format for common payment validation, routing and execution. Noble transmits a payables file from SAP to Wells Fargo's Payment Manager E-commerce system each business day to pay customers. To manage check payments, Noble uses Wells Fargo's controlled disbursement service, in which a bank notifies a customer of its cash position throughout the business day. Another service is positive pay, a fraud-control service in which Noble provides Wells Fargo with a list of checks it has issued for payment; the system screens all checks presented for payment against the list before distributing the funds. Wells Fargo incorporated Payment Manager into CEO after developing it for Noble.

Recently, Wells Fargo launched an internal version of CEO that gives relationship managers a complete view of customers' interactions with the bank. It requires minimal training and can be personalized for each user. CEO lets Wells Fargo employees share data and tools with the customer CEO portal.

The San Francisco bank's proximity to the innovation emanating from Silicon Valley helps it maintain a technological edge over its competitors, Wells Fargo executives say. "If we had been located anywhere else, we wouldn't have gotten such a jump start on the banking industry," says Danny Peltz, executive VP of wholesale Internet solutions and head of treasury-management products and services.

The bank has partnered with Silicon Valley stalwarts such as BEA Systems Inc., whose WebLogic Portal provides the building blocks to assemble and organically add components to CEO, and Oracle, which provides the primary database for thousands of the bank's wholesale customers. Oracle, itself a CEO user for its own treasury operations, obtains services such as funds transfer, treasury information reporting, foreign exchange and positive pay. The bank has brought in TeaLeaf Technology Inc., a provider of a real-time monitoring system that allows operators to detect quickly when CEO customers experience log-on problems and escalate the problems to the next level of technical support before customers notice.

The idea of a services-oriented architecture, or Web services, for delivering commercial banking grew out of Wells Fargo's early success with online consumer banking; in 1995, it offered banking services on its Web sites while most banks required customers to use dial-up systems. Four years later, Wells Fargo formed the Internet Services Group, a kind of guerrilla force whose mission was to Internet-enable all of the company's businesses.

Two group members were Steve Ellis, executive VP of wholesale services, and Peltz. They realized then that the key to retaining the bank's edge lay in applying nascent Web-services technologies that could let a business customer access all services with a single sign-on.

Over time, the bank assembled the backbone of the architecture that would become CEO. Unix and Microsoft NT servers acted as the gateways to the transactional systems. BEA's WebLogic and IBM's WebSphere provided the critical application infrastructure. BEA's Tuxedo and IBM's MQSeries furnished the middleware to cross-connect with systems on the back end. Oracle provided the relational database that runs on Sun Unix servers. The bank later incorporated XML into Payment Manager. A year after its launch in June 2000, CEO had 11,000 customers online; today, 25,000 business customers use CEO.

The commercial banking part of the Internet Services Group resides in the wholesale banking group, rather than a centralized business unit. "We were trying to change business processes internally, and the best way to do that [was] to become part of the wholesale banking group," Ellis says.

Sensitive to customer needs, Wells Fargo performs what it calls ethnography studies weekly at client sites to give it continuous customer feedback during each step of a product rollout, easing the integration of the technology into the businesses process. Bank experts literally camp out at a customer site for several days to observe how employees go about their jobs. The bank's goal is to work proactively to increase CEO's use in order to spot situations in which customers are dissatisfied with any of the product's features and get them fixed. Wells Fargo presents a detailed report of the findings to the customer and bank executives responsible for servicing that customer. Besides building customer loyalty, the studies help the bank improve its tech-laden products.

Gary D. Nelson Inc., a $200 million-a-year temporary staffing company, recently participated in a 2-1/2-day study. Wells Fargo staffers interviewed key members of Nelson's management team for two hours each and observed various financial workflows that employees perform, such as payroll, accounts payable, and accounts receivable.

Wells Fargo's teams are part of the wholesale banking division and consist of four people who come from its strategic account-management group and possess a variety of banking experience in treasury management, investments, credit card, and relationship management. A database and reporting system is used to communicate with the appropriate areas. Wells Fargo staffers receive the data and work with the business groups to establish processes and technology to aid the customer.

The bank assigns its wholesale customer strategies unit the task of determining ways to improve the customer experience, and it passes on recommendations culled from the study to the bank relationship manager who works with the customer. There's no cost to the customer. The payback for Wells Fargo is a deeper and stronger relationship with customers. Wells Fargo says it's one of a few banks that performs such ethnography studies.

Wells Fargo's study for Nelson disclosed a range of problems: The company maintained different business units that staff 5,000 workers, ranging from managers and clerical employees in its offices in Sonoma, Calif., to field workers in the vineyards of Napa Valley. Each week, its payroll department scrambled to collect the number of hours worked for each employee and get paychecks out. The company, meanwhile, collected payments from Nelson's clients that employed the temps. "In our business, cash flow is everything. We pay people before we invoice the client," Nelson CFO Bob Rembowski says.

The ethnography study uncovered several other problem areas, chiefly that Nelson needed to push direct payroll deposit more aggressively: It was writing 100,000 payroll checks a year, while only 20 percent of its contract workers used direct deposit. Writing payroll checks is expensive. Labor, overhead, and banking fees add up. In addition, paper checks invite fraud, something electronic payments can eliminate. Wells Fargo recommended that Nelson adopt payroll cards, which allow pay to be electronically deposited into an employee's checking account. The bank also suggested Nelson improve cash flow by producing a cash-flow report for each of its five divisions, complete with details on checks written, recurring payments and cash inflows. Nelson should make more use of CEO's many services, including online payments, check imaging and a variety of bank reports, Wells Fargo said. Nelson evaluated the recommendations and developed a schedule to implement them.

Wells Fargo catalogs each ethnography study in an electronic library by type of industry, providing the bank with a storehouse of knowledge that can be queried according to industry. The bank uses the library to "pull out trends and create a data warehouse, and then go to product managers to say where we can improve," says Pam Clifford, executive VP of the wholesale customer strategies group. In addition to on-site visits, the bank holds online meetings with customers. The studies have let Wells Fargo gain a deeper understanding of its customers' needs and improve its responsiveness.

The re-engineering of Wells Fargo's customer portal begins and ends with the needs of customers, the bank says. The next generation of online banking will center on delivering information to customers, who will be empowered to arrange and rearrange their online portals in order to do their jobs faster and more efficiently. By doing that, bank officials hope, customers will be satisfied and in turn remain loyal to the Wells Fargo brand.